Monday, October 13, 2008

Columbus Clearly was a Bull

With a 700 point intraday rally the markets have gained over 13% since mid-day Friday. That would be a good year on Wall Street, instead we've swung 13% in just over 1 day of trading. The speed with which the market snapped back on no fundamental news is disconcerting.

Things to consider - the market today is operating in a vacuum because the bond market is closed today and the understanding of how weak the economy really is are just starting to leak out. One analyst today projected that a couple of hundred billion dollars worth of tech spending is on hold because of the weakening global economy. Earnings for 2009 and 2010 are going to be much, much lower than current forecast and that means stock prices will eventually be much lower than they are today.

I've said for sometime that the market is getting whipsawed by hedge funds and technicians. The technicians think the market is going on a straight shot from here to 10,000-10,300. At the current pace that is just another good day on Wall Street. Be prepared for another serious bought of selling if this market gets back near that 10,000 level.


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